Tories: Changes to employment rights could cause ‘crisis’ for small businesses – Irvine Times

Shadow business secretary Kevin Hollinrake claimed the employment rights bill would create an “existential crisis on a scale not seen since the pandemic” for small businesses.

Policies such as protection from day one against unfair dismissal and a ban on zero-hours contracts are “likely to have a disproportionate cost on small and micro businesses”, according to economic analysis published by the Department for Business and Trade.

The impact assessment shows that changes to paternity leave will result in small businesses bearing 35% of the cost, while accounting for only 29% of employees. It also notes that 74% of small businesses employ at least one worker on a flexible contract, meaning many will be hit by an “administrative burden” following the changes.

Proposed changes to statutory sickness benefit to remove the earnings floor and waiting period are also expected to have “disproportionate costs on small and micro businesses”.

Downing Street said the impact assessment showed the bill “will have a positive impact on economic growth”.

Mr Hollinrake, who co-founded an estate agency in 1992, told the Commons: “The question I ask myself now is, with this legislation in place, would I start this small business again today? Unfortunately, the answer will probably be no, certainly not one that hires people.

“This is because the very high costs of these measures will be borne by all companies, which will then be passed on in the form of higher prices, reduced wages and job losses. They will fall hardest on small businesses, for whom these measures can be existential.

He added: “What this Bill is doing is putting the cart before the horse. For small businesses in particular, this bill creates an existential crisis on a scale not seen since the pandemic. The future of hundreds of thousands of business people and millions of jobs is in (Angela Rayner’s) hands.

“I urge her now to think again, to withdraw this legislation, to listen carefully not only to the unions but to the voice of business before it is too late.”

Opening the bill’s second reading, Deputy Prime Minister Angela Rayner promised to “turn the tide” on alleged low pay and insecure work.

Asked about the paper’s projected cost to business, she said: “The impact assessment also makes clear that there will be a positive impact on growth and more than 10 million workers will benefit from Labour’s plan in every corner of this country.

“And the money in their pockets will go back into the economy and support businesses, particularly those on the high street.”

Overall, the plans are expected to add “less than 1.5%” to employment costs.

Ms Rayner added that the bill would end the “bullying” tactics of firing and re-hiring, saying: “Even the threat of firing and re-hiring often means that people voluntarily agree to lower pay and reduced terms and conditions.’

Ahead of the debate, the Prime Minister’s official spokesman said: “What this Bill represents is an investment by business, by employers, in their employees.

“For too long, low productivity, insecure work and broken industrial relations have held the economy back.

“Last year we saw the highest number of working days lost to strikes since the 1980s, costing the economy billions of pounds.”

The spokesman added: “The impact assessment says there will be a positive impact on economic growth. But of course, this is not all that the government does to support economic growth in the economy.

The Trades Union Congress (TUC) said on Monday afternoon that the assessment showed the legislation was “good for workers, good for business and good for the economy as a whole”.